(Bloomberg) — Stocks staged a modest recovery as investors looked for dip-buying opportunities while awaiting clarity on how President Donald Trump’s trade policies will play out.
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Shares in Europe rebounded from the worst three-day loss in five years, while US equity-index futures pointed to gains on Wall Street following Monday’s dizzying swings. Treasuries advanced after Monday’s sharp selloff. The dollar slipped against major peers.
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Volatility has surged with $10 trillion wiped off global equities after the US unveiled sweeping tariffs last week. As fears of a global recession and escalating trade war mounted, investors have been left clinging onto any signs of respite, with some, including BlackRock Inc.’s Larry Fink, seeing a long-term buying opportunity. Goldman Sachs Group Inc. strategists, however, warned of longer-lasting cyclical bear market as recession risks mount.
“It is, technically, the setup for a ‘Turnaround Tuesday’ today as calmer heads tend to prevail, and dip buyers emerge,” said Michael Brown, a senior research strategist at Pepperstone Group Ltd. “I wouldn’t exactly be betting the house on a durable bounce, though, unless and until we get a decisive policy pivot.”
Trump made a string of comments Monday about his planned duties on worldwide trading partners. Yet he offered little clarity about what he is seeking in exchange for lowering levies — or whether he’s willing to offer relief at all. He rejected a European Union proposal to drop tariffs on all bilateral trade in industrial goods with the US, and threatened to slap China with an additional 50% import tax.
“The markets have come very far, very fast,” said Michael Kelly, global head of multi asset at PineBridge Investments. “It’s time for them to stabilize and figure out what the next turn of events is: up because the tariffs are coming down or down because the global economy is going down.”
Treasuries pared some of yesterday’s heavy losses — at one stage longer-dated yields were up the most since March 2020. Investors will look to bond sales Tuesday to see if there’s any sign of a crack in demand with the US set to sell three- and 10-year notes and 30-year bonds.
“Last night’s price action was more about de-risking and taking profit on those trades which are in the money to cover losses on other assets such as equities,” said Damien McColough, Sydney-based head of fixed income research at Westpac Banking Corp.
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Benchmarks in Hong Kong and China advanced as state-linked funds scooped up assets and the central bank promised loans to help stabilize the market.
Japanese shares jumped as Trump assigned two members of his cabinet to kick off bilateral trade talks after a call with Prime Minister Shigeru Ishiba. Japan appeared set to get priority over other US trading partners in talks on tariffs, putting Tokyo at the head of a long queue of nations seeking to roll back the levies.
On Tuesday, China slammed the US for threatening to raise tariffs and pledged to retaliate if Washington followed through. Meanwhile, in signs that Beijing is gearing up for prolonged trade tension, its state-backed funds pledged to buy local equities and exchange-traded funds. The central bank said it will provide support to a sovereign fund when it’s necessary, in order to safeguard the stability of capital markets. It also allowed the yuan to weaken through a lower reference rate.
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Traders’ bets on how much the Federal Reserve will lower US interest rates this year have been fluctuating. At least three reductions are now reflected in overnight interest-rate swaps this year, with the first fully priced in for June. Fed Chicago President Austan Goolsbee said there’s a lot of anxiety among business leaders that tariffs could spark widespread supply disruptions and renew inflationary pressures.
An increasing number of prominent finance executives have spoken out about the risks of Trump’s tariff policy, with billionaire Ken Griffin calling it a “huge policy mistake” by the administration.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.8% as of 9:20 a.m. London time
S&P 500 futures rose 1.4%
Nasdaq 100 futures rose 1.3%
Futures on the Dow Jones Industrial Average rose 1.8%
The MSCI Asia Pacific Index rose 2.4%
The MSCI Emerging Markets Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.3% to $1.0943
The Japanese yen rose 0.5% to 147.08 per dollar
The offshore yuan fell 0.1% to 7.3547 per dollar
The British pound rose 0.3% to $1.2756
Cryptocurrencies
Bitcoin rose 0.2% to $79,100.78
Ether fell 0.8% to $1,557.8
Bonds
The yield on 10-year Treasuries declined four basis points to 4.14%
Germany’s 10-year yield declined two basis points to 2.59%
Britain’s 10-year yield declined four basis points to 4.57%
Commodities
Brent crude fell 0.6% to $63.83 a barrel
Spot gold rose 0.8% to $3,007.53 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Aya Wagatsuma, Sujata Rao and Michael Msika.
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